It can be challenging to provide project estimates for effort hours, duration and cost. Of the three estimates, you must start off with an estimate of effort hours. Without an idea of the effort hours, you cannot accurately estimate duration or cost.
One of the key factors in converting an estimate of effort hours into duration is to determine a standard for how many productive hours of work you will experience in a typical workday. For example, if you have an activity that you estimate will take forty effort hours; it is unlikely that it can be completed in five eight-hour calendar days. There are many additional work and personal activities to factor into the estimated duration as well. Without taking these into account, it is likely that you will hit your estimates for effort hours, but run over your duration estimates. Project Manager need a "reality factor" to convert the estimated effort hours to estimated duration. You need to determine the number of productive hours per day a person is actually going to work. There are normal non-project activities that come up during the day that need to be accounted for. This includes departmental meetings, social conversations with co-workers, doctor’s appointments, sick time, administrative activities, going to the bathroom, etc. You could try to come up with the number of productive hours per day your specific team works, but it would be very tedious. A generally accepted ballpark number for average productive hours per day is 6.0 to 6.5, based on an eight-hour day.
This does not mean that in any one day a person may not be productive for the full eight hours. However, it does factor in a person’s productive hours per day over time. For instance, in a 40 hour week, one of your team members may have a one-hour department meeting, spend three hours socializing, leave two hours early one day for a doctor’s appointment, spend one hour on administrative requests, spend one hour on the phone for non-business reasons and spend one hour going to the bathroom and the break room (12 minutes per day). So, during that week the person was available for 31 hours, or six hours and twelve minutes per day.
Share with the team the scheduling assumptions that you are making and your expectations. They must take the responsibility to tell you if outside influences are making it difficult for them to spend the allotted time on the project. That will give you the input you need to change their work responsibilities or else change their availability and productivity factors.
When you have contract resources, you should also take a productivity factor into account. Even though these resources are contractors, they will still experience many of the factors that lead to a less than 100% productivity factor. For instance, they are still going to socialize a little and they still need to go to the bathroom. However, you do not expect that contract people will have the same level of non-productive time as employees. A good rule of thumb for a contract resource is 7 to 7.25 productive hours per day. This factor recognizes that the contract resources are not robots and they will not be 100% productive every day. Of course, you still need to allocate contract resources for eight hours per day and you still need to pay them for eight hours per day. However, for the purpose of your work plan, you should factor in the productivity factor as well.
For example, let’s say you have an 80 hour activity. If an employee is applied full time, it may take him or her a little over twelve days (80 / 6.5 productive hours per day) to complete the work. If a contract resource is allocated full time to this same activity, the activity duration would be eleven days (80 / 7.25 productive hours per day).
Include Project Meetings and Collaboration Time in the Estimate
Departmental and company meetings are not typically within your control and are not accounted for on the work plan or in the estimate. They may be accounted for in the estimated duration if you factor in a reduced number of available hours per day for each resource (say 6.0 or 6.5 hours per day). The reduced number of hours takes into account these types of meetings that you have no control over.
On the other hand, meetings that are project-related should be included in the work plan and should be added to the estimated effort of the project. This is because meetings of this type are within the control of the project team. The project manager can schedule these for one hour every other week or they could be scheduled every day.
Likewise, try to account for the total time required for all participants in any collaborative project-related meetings. For instance, if you are planning deliverable walkthroughs, make sure you include the time of all participants. When you are circulating documents for approval, include some review time for each person that you think will be involved. If you are planning on having review meetings at the end of each milestone, make sure to include time for each participant.
The Client May Think the Estimate is too high
After you have prepared your estimate, you may need to defend it if the client thinks that the numbers are too high. You should be able to first defend the estimate by explaining the estimating techniques you used, the process you followed and the assumptions you made. If the client still thinks the numbers are too high, or cannot afford the solution at that cost, there are a few options.
1. Determine if the client has any additional information that would allow you to revise your assumptions and perhaps revise the estimate. For instance, if a critical end-date now has some flexibility, perhaps the estimate can be revised based on this new information.
2. Determine whether high-level requirements and functionality can be scaled back. In many cases, the original set of features and functions is more of a wish list. After seeing a price tag, it is very possible that the client can live without certain features.
3. If you included a high contingency to reflect a high estimating risk, ask the client for more time to gather more detail for the estimate. This may result in there being less uncertainty and risk, and allow you to reflect this as a smaller contingency.
Restructure the project to only include the detailed analysis phase. After the full analysis is completed, re-estimate the remainder of the project, based on a confirmation of exactly what is being requested. The total effort and cost may or may not be lower, but at least you will have more detailed information to back up your estimate.